t o p i c a l a d v i c e
Brian Duckett Maurice Logie
Brian is Managing Director
Maurice is a director for a British
of Howarth Franchising. His
Franchise Association affiliate
area of expertise is franchise
development in the UK and
member – Moreland Insurance.
worldwide. He started his career
He is responsible for business
as a franchisee then became
development and specifically the
franchisor and now is an advisor
francover.com brand.
to businesses either considering
or operating a franchised
network.
Are there any recognised qualifications What is professional indemnity insurance
for franchisors and their staff? and should a franchisor have it?
The first country to introduce professional qualifications for Professional indemnity insurance is cover to protect a
franchise support staff was the USA, where the International business in terms of its legal liability for advice given to
Franchise Association runs a Certified Franchise Executive (CFE) clients and also to protect itself for legal liability for any
programme. Delegates to various training sessions and events, errors or omissions made. In the case of franchisors there
such as its annual convention, receive credits according to which is clearly a legal relationship in terms of the franchise
events they attend; and when they accrue sufficient credits they agreement. A professional indemnity policy (PI) can offer the
receive their CFE award. The Franchise Council of Australia (FCA) additional safety net that ensures that if any legal action is
has since started something similar. contemplated by the franchisee, then the insurers will handle
this claim.
In the UK, the Franchise Training Centre runs a series of
one-day workshops, which can lead to the award of the For example, a franchisee may allege that the franchisor
Diploma in Franchise Management (DFM). Going through the has given defective or insufficient advice in the context of
diploma programme gives franchise support staff a holistic running a particular franchise, and, as a result, the franchisee
view of the entire franchise management role, ranging from is financially disadvantaged. Even if the resultant claim proves
marketing a franchise and recruiting franchisees, through to be unsubstantiated, the PI policy will cover the legal costs
monitoring and motivating franchisees, to understanding associated with defending the claim.
franchisees’ financial accounts, preparing business plans and
avoiding litigation. The purpose of professional indemnity insurance for a
franchisor is therefore to ‘sit behind’ the franchise agreement
However, it is also possible to simply attend just those and make sure that any alleged shortcomings on the part
workshops that cover a specific role, eg, how to recruit of the franchisor have minimal impact in terms of financial
franchisees, and to attend other sessions as and when implications to the business. Also, from a relationship point
they become relevant. To achieve DFM status a diploma of view, the franchisor is able to pass on to their insurer the
candidate must also complete a dissertation, which shows responsibility of handling the claim, thus allowing the dispute
how some of the things that have been learned during the to be dealt with ‘at arm’s length’. I would recommend that
training programme have been successfully implemented in all franchisors seriously consider the merits of professional
the workplace to the benefit of both the franchisor and its indemnity insurance for their business.<
franchisees, which can also help with the employer’s Investors
in People status.
If you would like to ask our experts a question
please write to:
The Editor, Franchisor News,
111 Upper Richmond Road, Putney,
London SW15 2TJ or email: fnews@vmgl.com
franchisor news | 39
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